Bankrupt and Need Car Insurance?

Did you know that filing for bankruptcy could potentially have an adverse effect your auto insurance rates? With the continually volatile economy, a growing number of individuals who never would have considered bankruptcy in the past are now finding themselves turning to bankruptcy lawyers to help get out of debt. Unfortunately, if you do file for bankruptcy, the negative mark left on your credit report can have a negative impact on your auto insurance rates as well.

The Credit Rating Connection

When you file for bankruptcy, a negative mark will be left on your credit report for up to ten years. Since many insurance companies check credit reports when determining rates, this negative mark on your credit rating can have a significant impact on your insurance rates. Generally, these companies will check your credit rating once per year when it comes time to renew your policy, so you may not see an increase in your rates right away.

Avoiding the Insurance Rate Increase

If you live in a state where insurance companies are allowed to access credit records when determining insurance rates, there is no 100% effective way to avoid these rate hikes. You can, however, decrease the risk of seeing a rate increase if you make certain to pay your insurance payments on time. This way, you can prove that you are still capable of handling your insurance policy responsibly.

You should also take care to keep your driving record clean, as some insurance companies maintain that those who are experiencing financial difficulties are a greater insurance risk. In fact, if you shop around for a new auto insurance policy after filing for bankruptcy, you may find it difficult to get approved. Therefore, you should exercise extra care in making certain to remain in good standing with your current auto insurance company so you don’t find yourself without the coverage you need.

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